Question 1

How is my hourly rate calculated?

Accepted Answer

We work backwards from your target net income. First we gross it up for tax (net ÷ (1 − tax rate)) to find the gross income you need to earn. Then we divide that by your total billable hours per year, which is calculated as: (260 working days − holiday days − sick days) × billable percentage × hours per day. The result is the minimum you must charge per hour to hit your income goal.

Question 2

What does the billable time percentage mean?

Accepted Answer

Not every working hour is billable. Time spent on sales, admin, professional development, and business development is real work but unpaid. A 70% billable rate means 70% of your available hours generate revenue. Freelancers new to self-employment often overestimate this — 60–70% is a realistic starting point, and solo operators rarely sustain more than 80%.

Question 3

Should I use a higher tax rate than I currently pay?

Accepted Answer

As a freelancer you are typically responsible for both employee and employer portions of payroll taxes, plus income tax. US freelancers often use 25–30% as a self-employment estimate; UK sole traders commonly use 25–35% including NI. It is always safer to over-estimate your tax rate — any surplus becomes your profit buffer.

Question 4

Why does the calculator show a much higher rate than I expected?

Accepted Answer

The most common surprise is the combined effect of unpaid time and taxes. If you only bill 60% of your hours and pay 30% in tax, you need to earn roughly 2.4× your target income gross — meaning your hourly rate must be 2.4× what you would earn in an equivalent salaried role. This is why freelance market rates are typically 30–100% higher than equivalent employment rates.

Question 5

Should I charge different rates for different clients?

Accepted Answer

Yes — value-based pricing means charging what the work is worth to the client, not just what it costs you to deliver. A logo redesign for a startup costs the same in your time as one for a Fortune 500 company, but the value (and budget) differs enormously. Common strategies include a standard rate for ongoing clients, a higher project rate for one-off engagements, and a premium rate for rush work or specialist expertise. Use this calculator as your floor, then price above it based on value.

Question 6

How do I handle scope creep in pricing?

Accepted Answer

Scope creep — work expanding beyond the original agreement — is one of the most common reasons freelancers earn less than their calculated rate. The best defence is a detailed written brief before work starts, a change order process (any new request is a new quote), and fixed-price projects scoped tightly rather than open-ended retainers. When quoting, add a 15–20% buffer to your time estimate to absorb minor scope changes without renegotiation.

Question 7

How often should I raise my freelance rate?

Accepted Answer

At minimum, review your rate annually to account for inflation and skill growth. Practically, the best time to raise rates is when starting a new client relationship, after completing a high-visibility project, or when you are turning down work due to capacity (demand exceeding supply is the clearest signal your rate is too low). A 10–20% annual increase is common for in-demand specialists. Raise rates with existing clients by giving 30–60 days notice and framing it around the value you deliver.

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